Diversification is key

A good investor understands that generating sustainable returns requires a long-term investing approach that can only be achieved with a well-diversified portfolio. What it all boils down to is recognizing that risk is inevitable and is an inherent part of the investment process. Certainly, not all investments will meet or surpass expectations, which is where the fundamental principle of diversification becomes essential.

Recent events, such as the fall of Silicon Valley Bank and Credit Suisse, have brought into focus the fragility of the banking sector and also markets more broadly. It is a timely reminder that what we think is safe and stable, may not always be the case. Those exposed to the markets affected got spooked and those with money in SVB and CS got the scare of their life – and there lies the importance of diversification. As market uncertainties continue to loom, it is important to remember a few core principles:

• Invest wisely: If you have the capital, this is the perfect time to put your money to work. But remember, a sound investment strategy is built on a diversified portfolio tailored to your specific needs and risk appetite. Explore different asset classes, especially if they are uncorrelated, and remember that stable cash flows through dividend yields can be key during times of volatility.
• Do your research: It’s crucial to explore more than one investment option, understand the benefits and drawbacks of each, how they behave relative to each other, and how they contribute to your personal wealth goals. Real estate exposure is considered essential for every investor, and now fractional investing has granted everybody access to it, whether you want to invest $100, $1K, or $1M!

💭 Fractional real estate investments are far more resilient in the face of broader market impacts and economic uncertainty, versus traditional REITs, which are highly correlated to the stock market and can significantly underperform during a downturn. If you want exposure to real estate, think twice about how you get it!

• Diversify, diversify, diversify: It may seem like a daunting task without any explicit instruction, and may feel like this term has been thrown at you over and over again without much explanation, but it really is simple. The goal is to acquire various uncorrelated assets so that the performance of one doesn’t significantly influence the entire portfolio or another asset. By allocating your total investable funds across major asset classes, such as stocks, bonds, commodities, and real estate, you achieve diversification! Learn more here.

The bottom line? By conducting thorough research and leveraging the many benefits that fractional investment structures have to offer, you can optimize your financial strategy and minimize your exposure to risks associated with market volatility.